Group Savings Plans
Group Savings Plans, which include pension plans, registered retirement savings plans (RRSPs) and deferred profit-sharing plans (DPSPs), are a great tool not only to increase your company’s appeal, but also to create employee attraction and retention. These plans show employees that their employer considers retirement planning an important component of a comprehensive benefits package.
This gives existing employees peace of mind that they are being well looked after while also providing incentive when recruiting new employees. Pension plans, group RRSPs and DPSPs enjoy lower investment costs for employees and generate better returns without increasing risks. Since funds come off at source, higher amounts get deposited into the plan, also reducing costs to each individual member.
At DBA, we know that building the optimal savings plan can be daunting. DBA believes in a systematic approach that is designed to create a personalized plan that meets the different needs of clients.
Our team of experts guide you through your options and suggest the best possible solutions to your company.
Group Savings Options
Group Retirement Savings Plans (Group RRSPs) allow employers to offer at source deductions for staff and the employer, which provides an easy mechanism for bulk contributions into a plan.
At the same time, Group RRSPs allow members to take advantage of lower fees when compared to individual RRSP plans, meaning that members are able to keep more of the gross returns, leaving more funds in their account.
Additionally, this type of plan allows for equitable options for all members, as each individual, regardless of invested assets, has the same access to boutique investment firms, which are typically only available to high net worth investors when investing individually. These members also have access to the same suite of services, regardless of tenure or asset base.
Lastly, Group RRSPs are eligible for the Home Buyer and Lifetime Learning Plan, much like the individual version.
A Registered Pension Plan (RPPs) is a group savings option that is designed to last through retirement. RPPs are great options for employers who want to provide for employees while ensuring that contributions are made towards members’ retirement plans. There are two types of RPPs: Defined Contribution Pension Plans and Defined Benefit Pension Plans.
Defined Contribution Pension Plan
A Defined Contribution Plan is a Registered Pension Plan that is formula driven based on tenure and salary, and creates a guaranteed income stream for as long as the member is alive. It works much the same as a Group RRSP, in that there are investment options and a defined amount that the employer and employee contribute on a regular basis.
Much of the features associated with a Group RRSP remain such as comprehensive services available to all, reduced fees, and streamlined contributions. One key difference is that it is restricted while employed, and with few exceptions, must be used for retirement purposes. As such, it is not available for the Lifetime Learning or Homebuyer Plans.
Defined Benefits Pension Plans
Most Defined Benefit Pension Plans also have survivor benefits for spouses and children. As they are retirement specific, Defined Benefit Plans are also not available for the Lifetime Learning or Homebuyer Plans.
Deferred Profit Sharing Plan (DPSP) is a group savings option available to all for-profit companies. Unlike a group RRSP, a DPSP does not create a taxable benefit when employers contribute, but still maintains other features found in a Group RRSP.
These features include streamlined contributions, reduced investment fees and consistent services and options for all plan members. In many cases, funds in a Deferred Profit Sharing Plan can also be made available for the Lifetime Learning and Homebuyer Plan.
A Deferred Profit-Sharing Plan is a great option for employers who want to provide a plan that mirrors a Group RRSP, without creating a taxable benefit.
Plan Compliance is something we take quite seriously at DBA. Plan Compliance includes ensuring that the plan that is put in place meets with the CRA guidelines when annual filings are required, as well as ensuring that Capital Accumulation Plan guidelines are met. This includes providing a wide range of investments and following this service model:
Annual Review with Plan Sponsors
- In accordance with Capital Accumulation Plan (CAP) guidelines: CRA considers adhering to CAP guidelines to be the responsibility of employers who offer group savings plans to employees
- Analysis of fees paid (called Investment Management Fees or IMF’s), ensuring that they are competitive
Information Sessions with the Staff (once per year at a minimum)
- Meetings are conducted onsite at all client locations
- Review of plan highlighting:
- Reasons to invest and market trends (both long term and current)
- Explanation of funds and various options available
- Benefits of the plan and how to maximize its utility
- Content in presentation is targeted towards staff demographics
One-on-One Sessions with Plan Members (as requested)
- Meetings scheduled around convenience of plan members (At their office/home etc.)
- Topics include:
- Retirement planning (incorporating CPP/OAS and other government programs)
- Investment advice
- General inquiries
Please reach out to our office directly if you would like to know more about how DBA handles Plan Compliance.